Harneys, dropRWA plan tokenized cat bonds for uninsured disaster risks
A large share of disaster losses remains uninsured even as capital continues to flow into catastrophe bonds. Harneys and dropRWA plan to launch tokenized cat bonds early next year to channel investor money toward hard-to-place risks such as floods, typhoons and wildfires.
Highlights
- Harneys and dropRWA plan to launch tokenized catastrophe bonds in early 2025, granting each token legal ownership in the underlying bond.
- Catastrophe bond market reached $65.6 billion outstanding in June, with new issuance hitting a record $11.3 billion in Q2, per Artemis.
- The structure seeks to extend cat bond access for hard-to-insure risks like floods and typhoons in Southeast Asia, while requiring minimum investment below $250,000 and adhering to regulatory standards.
Launch plan targets hard-to-insure risks
As reported by CoinDesk, the proposed structure would give each token legal ownership in a catastrophe bond, extending a market that has traditionally been aimed at specialist funds and large institutions. Harneys, a Bermuda-based law firm focused on global insurance, is working with tokenization platform dropRWA on the planned issuance for early next year.Catastrophe bonds allow insurers to transfer the financial risk of events such as hurricanes, wildfires and earthquakes to capital-market investors. The market had $65.6 billion outstanding in June, while new issuance reached $11.3 billion in the second quarter, the largest quarterly total on record, according to Artemis' recent cat bond report.
Harneys Bermuda managing partner Henry Tucker said the tokenized format is designed to help fund defined risks that can be difficult to place through conventional reinsurance channels. He pointed to flood cover and typhoon protection in Southeast Asia, where limited claims data and uncertain loss estimates can complicate pricing for insurers and reinsurers.
The firms are considering a structure that could support smaller beneficial interests than the conventional market, where many offerings require minimum investments of $250,000 or more. Tucker said the approach would still need to comply with securities, insurance and investor-protection rules and would not turn disaster coverage into a casual retail trade.
Our earlier article on battery energy storage in South and Southeast Asia explained how rising solar and other renewables are putting new strain on power grids, increasing the need for storage to balance intermittent generation and support peak demand. It also highlighted that scaling deployments depends on clear regulation, predictable revenue mechanisms, and managing execution risks such as battery degradation.
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